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Foreword by the Chairman
Operating profit
€1,222 million-4.7%
Net profit
€798 million, 0.4%
Net profit (excl. exceptional items and amortisation of goodwill)
€806 million, 1.4%
Net turnover
€9.3 billion, 9.1%
Total beer sales
109.0 million hectolitres, o%
Heineken beer sales
22.1 million hectolitres, 4.3%
Growth in operating profit excluding
the effects of first-time consolidations,
amortisation of goodwill, exchange-rate
movements and exceptional items.
Net profit, excluding exceptional items and amortisation of goodwill, turned
out 1.4% higher at €806 million. Organic growth* in net profit amounted to 7%.
Contributory factors in our organic growth were the improved sales mix
(reflecting the strong performance of the Heineken brand), higher selling
prices, increased sales and strict cost control. The acquisition of BBAG, the
largest purchase in Heineken's history, has significantly strengthened the base
from which we shall pursue earnings growth in the medium and long term.
Net profit
in millions of euros
800
700
600
500
400
300
200
100
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That Heineken is firmly on course is clear
not only from the organic growth in our
profit, but also from the rapid progress of
BBAG's integration activities in Central
Europe, the strengthening of our market
positions and brand portfolios in many
countries and the advances we are making
in cost control and innovation.
The external factor which affected our
profits were the sharp decline of the US
dollar and several other currencies. This
was compounded by economic weakness
in many countries, which depressed on-
trade sales and favoured the growth of
low-priced beer volume at the expense of
branded beers in the mainstream seg
ment. Furthermore we experienced reper
cussions of the Sars epidemics and the
Iraq war.
Demand for international and national
premium beers continued to grow in many
of our markets, as did the speciality beer
segment in most countries. Our operating
companies' local brand portfolios, in which
the Heineken brand plays a prominent
role, were able to profit from this trend.
Many reported an improved local-currency
operating profit, helped by a better sales
mix, effective knowledge transfer, efficient
working methods and cost savings. Higher
beer sales also contributed to profit
growth in some markets. Sales of Heineken
beer in the premium segment increased to
18.5 million hectolitres (+6.1%), with volume
rising fastest in Italy, Poland, Spain, France
and the Far East. Global sales of Heineken
beer, including the Netherlands, increased
to 22.1 million hectolitres (+4.3%). Amstel
sales were also up slightly (+1.8%), despite
the decline in the mainstream segment,
with Africa and Spain accounting for most
of this growth.
Sales in the North-East of the United
States, where we generate almost 40%
of our North American volume, were
depressed by very poor weather.
This flattened our growth curve in the US,
although sales in the rest of the country
continued to grow. The Heineken brand
is well positioned for further growth,
supported by our closer relationships
with supermarket chains, our sustained
focus on the on-trade, an expanded
sales force and innovative packaging.
Our growth strategy for the East Coast
is to concentrate on extending the market
share and for the West Coast to work on
expanding the distribution.
HEINEKEN N.V. ANNUAL REPORT 2003
12